Hansung Life Insurance Co., Ltd. (Bae, Kim & Lee LLC et al., Counsel for the defendant-appellant)

Fair Trade Commission (Law Firm Democratic, Attorneys Cho Young-ap et al., Counsel for the defendant-appellant)

May 8, 2013

1. The Defendant’s corrective order and penalty surcharge payment order issued to the Plaintiff on December 15, 2011 shall be revoked entirely.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of disposition;

On December 15, 2011, the Defendant ordered the Plaintiff to pay the penalty surcharge of KRW 48.6 billion and the penalty surcharge of KRW 48.66 billion on the ground that the Plaintiff committed the following unfair collaborative acts with respect to the scheduled interest rate of KRW 1) and the publication rate of KRW 2) in the 15 life insurance companies including Samsung Life Insurance Co., Ltd. and the 15 personal life insurance markets from 1998 to 2006 (hereinafter “instant disposition”).

From 198 to 2000 the table included in the main text, ① agreed to set a specific interest rate or to reduce the scheduled interest rate on several occasions (hereinafter “first act”). ② From 2001 to 2006, information on future scheduled interest rate, etc. that are not disclosed to the market was exchanged, and each person’s interest rate was determined by reflecting these information (hereinafter “second act”).

[Reasons for Recognition] Gap evidence No. 1

2. Whether the disposition is lawful;

A. As to “the second act”

1) The defendant's grounds for disposition

The content of the second act based on the instant disposition in the written resolution by the Defendant is that the 16 life insurance companies, including the Plaintiff, exchange information on future scheduled interest rates, etc., which are not disclosed to the market from 2001 to 2006, and reflect such information to determine their respective interest rates. This is the “an agreement of a nature to remove the risks associated with the determination of their own interest rates by sharing information on scheduled interest rates, etc., not on the scheduled interest rates at a certain level, rather than on the scheduled interest rates, etc.” (Evidence A 1).

(ii) exchange of information and collaborative acts;

A) Defendant’s assertion

The defendant asserts to the effect that it is a collaborative act prohibited by the Monopoly Regulation and Fair Trade Act (hereinafter referred to as the "Fair Trade Act"), first of all in relation to the above disposition, it is an exchange of information about expected interest rates in the future that is not open to the market by the 16 life insurance companies, including the plaintiff, etc., and setting their respective interest rates on the basis thereof.

B) Determination

Article 19(1) of the Fair Trade Act provides that an enterpriser shall not agree with other enterprisers to jointly engage in any of the following acts that unfairly restrict competition or allow other enterprisers to engage in such act, by contract, agreement, resolution, or any other method, and subparagraph 1 of Article 19 of the Fair Trade Act provides for “the act of determining, maintaining, or changing the price (hereinafter “price determination, etc.”).

Therefore, unlike the legislation of the foreign country which regulates the "dynamic activity," such as the exchange of information, in addition to the agreement between the enterprisers, as a kind of the collaborative activity, the Korean Fair Trade Act has to provide information on the price with other enterprisers in order to establish an unfair collaborative act under the Korean Fair Trade Act, it is not sufficient for the enterprisers to exchange information on the price with each other, and furthermore, they should agree with the other enterprisers to jointly carry out the act such as price decision. Of course, such agreement should be sufficient to the extent that it would be impliedly required, but at least it should be jointly "the act such as price decision" between the enterprisers.

However, insofar as it is not recognized that the 16 insurance companies, including the Plaintiff, agreed to jointly engage in the act of price determination, etc. from 2001 to 2006, it cannot be deemed that Korea's Fair Trade Act was prohibited solely on the ground that the act was committed as alleged by the Defendant. The Defendant's assertion is rejected.

(iii) agreements to jointly act such as pricing;

A) Defendant’s assertion

Next, the defendant asserts that the above disposition grounds mean that there was an agreement to jointly determine the interest rates of each person through the exchange of information and to jointly act such as price determination.

B) Determination

From 2001 to 2006, 16 life insurance companies including the Plaintiff have exchanged information on scheduled interest rates, etc. which have not yet been determined and have not yet been disclosed to the public. Such information together with the information on scheduled interest rates, etc. of other life insurance companies, the parties determined their scheduled interest rates, etc. by comprehensively taking into account the standard interest rates, market interest rates, their asset management return rates, customer guidance, the degree of burden on responsibility, business competitiveness, etc. at the time, and the scheduled interest rates, etc. do not conflict with the parties that are not recognized as having a certain form of apparent external appearance, or are clearly disputed.

According to this, it seems that the 16 life insurance companies, including the plaintiff, exchanged information about the scheduled interest rate in advance, and the exchanged information was one of the important data in determining the scheduled interest rate, and could remove the risk that could occur in case of independent decision without knowing the information.

However, as seen earlier, the 16 insurance companies have determined the scheduled interest rate in light of the circumstances other than the exchanged information, and the Defendant did not have agreed on the scheduled interest rate from 2001 to 2006, and the submission of evidence alone does not recognize a certain form of external change, such as the scheduled interest rate, and the continuous estimate interest rate has been reduced so far. However, this is merely because the standard interest rate, which serves as the criteria for determining scheduled interest rate, and the market interest rate, have been continuously reduced, and it is difficult to say that the second act in this case is difficult to be seen as due to the lack of logical difference. In addition, considering the above, it is difficult to readily conclude that the 16 life insurance companies, including the Plaintiff, etc., including the Plaintiff, etc., have determined their respective interest rates through the exchange of information from 2001 to 206 to 206, and there is no sufficient evidence to acknowledge that there was a difference between the Defendant and the Defendant’s life insurance company’s business operators’ life-based agreement.

4) Sub-determination

Therefore, the Defendant’s disposition based on the premise that the Plaintiff conducted a collaborative act prohibited by the Fair Trade Act with another 15 life insurance companies through “the second act” is unlawful without further examining the remainder of the disposition (However, if Samsung Life Insurance Co., Ltd., a market share of which was scheduled rate of exchange and scheduled rate of exchange, etc., 1, 3, 5, 6, 7, 21-30, 58-64, 72-78, 3-9, 4-1-8, 1-8, 10-12, 15, and 16, and 50% of the total pleadings in the domestic life insurance market, based on the overall purport of oral argument, the Plaintiff and Samsung Life Insurance Co., Ltd., Ltd.’s share in the market share, determined the scheduled rate of exchange of information and anticipated rate of exchange of scheduled rate, etc., it cannot be deemed that there were different grounds for the agreement between the Plaintiff and the participant in the instant disposition and the participant in the instant case.

B. As to “the primary act”

The Defendant was “the primary act” from 1998 to 2000, and there was “the secondary act” from 2001 to 2006, but the instant disposition was taken on the ground that the entire act constituted a single collaborative act (Evidence A 1).

However, as seen above, “the second act” does not constitute a collaborative act prohibited by the Fair Trade Act. Therefore, even if there was such an act and it constitutes an unfair collaborative act under the Fair Trade Act, it shall be deemed that the second act has already been terminated in around 2001, in which the “the second act” began. Moreover, the instant disposition was made on December 15, 201, when five years have elapsed thereafter.

Therefore, the instant disposition against “the primary act” was unlawful as it was made after the expiration of the statute of limitations on the disposition.

3. Conclusion

The instant disposition is unlawful, and thus must be revoked. The Plaintiff’s claim seeking such disposition shall be accepted on the grounds of merit.

Judges Ansan-jin (Presiding Judge)

1) “The expected return rate which can be achieved by operating the premium received from the customer in a fixed interest-based insurance contract until the insurance money is paid. If the scheduled return rate is high, the insurance premium is covered when the estimated return rate is lower, and the estimated return rate is lower. In general, once a year, the estimated return rate set for a specific product is fixed until the insurance money is paid.

2) The premium paid by the customer is determined and published on the 1st day of each month as applicable to the interest-based insurance products. The premium paid by the customer is classified into risk insurance premiums classified for the payment of insurance proceeds, expenses incurred in business activities, such as insurance solicitation, etc. (project costs) and reserve funds for maturity refund, etc. The disclosure interest rate is a kind of interest rate imposed on the reserve funds. Generally, the disclosure rate is determined by reflecting the market interest rate, and the customer’s refund or intermediate termination refund is increased as the disclosure rate is higher.